Tag: Engagement

I’m always surprised when a healthy business announces mass redundancies.

According to my friends in banking, this is because I’m naïve.

‘The best time to make cuts is when you’re doing well’, they say. ‘It reassures the city that your growth will be sustained, because you’re operating efficiently.’

And, if you judge a business purely in spreadsheet terms, I can see why this would make sense.

The problem is that it doesn’t work like this in real life.

On a spreadsheet, taking 10,000 salaries out of your business is efficient, because it reduces your cost base without reducing your revenue.

Whereas, in real life, taking 10,000 people out of your business means the people who are left feel demotivated, because they know they’re going to have to do more work.

It means all the effort you put into building your ‘employer brand’ will be undermined, because the people who work for you no longer trust you.

And it means the experience your customers have is likely to feel less good, which means they’re less likely to come back, which means your revenue will go down.

In 2008, American academics Charlie Trevor and Anthony Nyberg carried out a massive global study into the effects of downsizing. They found that, on average, a 1% reduction in workforce had the following effects on the employees left behind:

31% increase in people choosing to leave

41% reduction in job satisfaction

36% reduction in commitment

In other words, any cost saving from the downsizing is massively outweighed by the loss of skills, goodwill and productivity that result from it.

The only businesses where it worked were the ones that managed the downsizing in a way that preserved the trust of their employees. By acting fairly, by communicating openly, and by showing them why it was the right thing to do.

In other words, by behaving like human beings.

There’s no function for this on a spreadsheet. But it’s the only way you’ll grow your business sustainably in the long term.

This blog has been adapted from a chapter in Matt’s new book; tribe: 66 ideas for building a winning culture. The book explores the characteristics that contribute to a winning workplace culture. If you fancy some bedtime reading, you can buy a copy here. Or pop into The Forge and pick one up for free (we might even make you a coffee…)

Herb Kelleher, who died this month, is widely regarded as one of the greatest CEOs America has ever seen.

Which is odd, because he never set out to run a business at all. He started his working life as a lawyer in New Jersey, before moving to Texas. It was while having dinner one night with a client in San Antonio that the two began discussing an idea for an airline that would help people travel more easily around the vast State.

The business that grew out of this conversation, Southwest Airlines, became the template for every budget airline that followed – as well as a shining example of what you can achieve with a business if you start by thinking about the people who work in it.

Kelleher’s genius was for making things simple and creating a culture where people took themselves lightly, but their jobs seriously.

When recruiting new pilots, he once brought all the prospective candidates together in a hangar on a warm day – and then turned the air conditioning off. An employee came out, apologised for the heat and offered shorts to anyone who wanted them. Some accepted but most, worried about not looking business-like enough, stayed in their shirts, ties and long trousers.

Only the candidates who took the shorts were offered a job. Kelleher wanted people who would be driven by common sense, not protocol – and flexible enough to adapt to unexpected conditions.

Naturally gregarious and charismatic, he once publicly arm-wrestled a rival for the right to use a disputed slogan (he lost, but with such good grace that he was still allowed to use it).

Above all, Kelleher had a gift for inspiring loyalty and dedication from his employees, because they knew with absolute certainty that they were his first priority.

Sailors in Nelson’s navy were entitled to a daily rum ration as part of their pay.

To make sure the rum hadn’t been watered down too much, the crew would test a sample from the barrel by pouring it over gunpowder. This process was called ‘proving’. If the gunpowder failed to ignite, it meant the rum contained too much water.

So the navy carried out experiments to determine the lowest concentration of alcohol at which the gunpowder would still ignite. They calculated it at four parts alcohol to three parts water (57.15% Alcohol by Volume in today’s language).

From then on, rum containing that percentage of alcohol was deemed to be ‘100 proof’, a measure which became the standard benchmark for alcoholic strength in the UK until 1980.

It’s a handy pub quiz fact. It’s also a fascinating example of the value of trust in employee relations.

Because the officers on board knew they could be confident the rum would ignite, they embraced the idea of the proof test and turned it into a public display. Which meant it stopped being a point of contention and mistrust for the crew – and, instead, became a repeated celebration of their employers’ integrity.

The Royal Navy became known for the morale and discipline of its crews and, as a result, their superior skills in seamanship and gunnery. Which allowed the British to defeat even their more powerful enemies, dominate the world’s oceans and establish the largest empire ever seen. All without spending a single penny more than they were contractually obliged to (because their rum rations were as efficient as they could possibly be).

Next time your finance director asks you why it’s worth investing in engagement, you might want to tell them this story.

Wikipedia was set up 17 years ago as an experiment in collaborative knowledge-building. It’s now the world’s fifth most visited website – and the first place most people turn for information about anything.

What’s interesting about Wikipedia is that it subverts the previous norm. Instead of being curated by experts, it depends entirely on volunteers to submit and update its content.

Detractors have claimed that this makes Wikipedia unreliable. How can you trust the accuracy of information, they argue, if you don’t know the authority of the source?

They’ve got a point: there have been well-documented examples of howling errors, as well as allegations of entries being manipulated by interested parties (including the CIA and political lobbyists).

On the other hand, Wikipedia includes over 48 million separate detailed entries, written in 293 languages. In almost every case, those entries were written – and moderated – by people with a far greater knowledge of their subject than could ever be possible with traditional reference sources, such as Encyclopedia Britannica or Larousse.

No matter how good your paid researchers might be, it’s simply not economically viable to have enough of them, with diverse enough backgrounds, to be able to know that much about that much.

Wikipedia is a trade-off: you lose a bit of certainty, but you gain a massive increase in depth, variety and richness of content.

It’s the same trade-off most big businesses struggle with every day.

On the one hand, they want to ‘empower’ their employees. They know that, in many cases, those employees have a much more direct connection with customers than the people at the top of the business. They want them to use their initiative to be more agile – and their personality to inject warmth and humanity into their daily work.

They know that, if they can do that, their customers will have a much better experience and their business will be more successful.

But, on the other hand, most businesses are terrified of giving up control. They’re scared that, given too much real autonomy, their employees will make bad decisions that damage their reputation or lose them money.

And they’re right. If you give your employees a genuinely free hand, in some cases they will make bad decisions.

But, if you don’t open yourself up to that possibility, you’ll never be able to harness the incredible creative and human benefits that real empowerment can bring to your business.

That’s Goodhart’s law (named after the economist Charles Goodhart, who first articulated it to explain why private enterprise principles introduced by the Thatcher government hadn’t worked very well).

I thought about it this morning, when I was going through my emails and found one inviting me to ‘The Engaging Employees Conference’ in London.

Of the 32 scheduled speakers, the one that most caught my eye was the HR Director of Wonga, a business that collapsed five weeks ago and is currently being wound down by the administrators.

Since the sub-title of the conference is ‘Optimising Performance’, having a speaker from a failed business is probably inconvenient for the organisers. But it’s also a timely reminder for delegates of what they should really be focused on.

The fetish for measuring employee engagement has been steadily gaining ground since Gallup first pioneered it in the 1990s, with their Q12 Survey. This invited employees to answer (anonymously) twelve different questions about their experience of work. ‘Do you understand what the business is trying to achieve?’; ‘Do you understand what’s expected of you?’; ‘Do you have a best friend at work?’ and so on.

The idea is that, if you keep asking the same questions every six months, the movement in the scores will tell you which bits you’re getting right, which bits you need to focus on and, ultimately, how engaged your employees are.

According to Gallup, businesses with high Q12 scores demonstrate significantly better performance: lower turnover of staff, higher sales growth, greater productivity, better customer satisfaction scores. Which is why nearly every large organisation nowadays carries out some kind of engagement survey.

The problem, as Wonga and others have found, is that improving your engagement score does not necessarily lead to improved performance.

It’s a perfect example of Goodhart’s law in operation.

An engagement survey is useful if it helps you build a true picture of the experience your employees have at work. As soon as you turn it into a target, you’re blurring that picture and encouraging managers to ‘game’ the numbers so that their score always shows improvement, even though the underlying experience may not. It’s the tail wagging the dog.

Now, don’t get me wrong – I’m 100% in favour of engaging employees.

I just think the best way to do it is by focusing on the things that will improve their experience of working in your organisation.

Not asking them the same questions over and over again – and then fiddling the numbers to tell a story they don’t recognise.

Seventy years ago, it was the worst kind of insult. It meant you’d betrayed your country and helped the enemy. If you were identified as a collaborator in post-liberation Paris in 1945, you’d be marched through the street with your head shaved, so your neighbours could jeer at you and throw rotten fruit.

But times have changed and the word has recovered a more positive meaning. Politicians now speak proudly of ‘cross-party collaboration’, fading music stars ‘collaborate’ with edgy hip-hop producers – and big companies want to unlock a brave new world of creativity by ‘making it easy for our people to collaborate and share ideas’.

The trouble is: why would you want to?

I mean, it’s easy to see what’s in it for the company. They want their employees to be more ‘open’ and ‘giving’, to embrace the hackathon culture of hip Silicon Valley tech companies; to tap into a sparkling well of innovation and value.

But it’s a lot less easy to see what’s in it for everyone else. Employees who do collaborate often find it doesn’t benefit them – quite the reverse, in fact. They see their ideas co-opted by others and used as a stepping stone to promotions and rewards that pass them by. So why bother?

The problem is that we want collaboration, but we encourage competitiveness.

We want people to work as a team, but we reward individuals.

In its most recent annual survey, the High Pay Centre noted that, between 2016 and 2017, the average annual pay of a FTSE 100 boss rose by 11% to £3.93m. That’s roughly 145 times more than their average employee earns.

Now, as it happens, I know a few FTSE 100 bosses – and they are (mostly) smart and charismatic and capable people. Not the uncaring, out-of-touch corporate fat cats lampooned in the tabloid press.

But the point I always try to make to them is that, if you really want people to collaborate, engage and share their best ideas, you need to create an environment where they feel comfortable and appreciated for doing it.

Because, if you don’t, it won’t be long till collaboration is a dirty word again.

When senior managers lock themselves in a room to define a mission for their business, the example they’re often told to aim for is John Kennedy’s ‘Man on the Moon’ speech.

I’ve heard four separate consultants use this example and every one of them made the same mistake. They each identified the famous goal – ‘land a man on the moon and return him safely to earth’ – as coming from Kennedy’s speech about the space programme at Rice University, Texas in September 1962.

In fact, it came from a speech he made to Congress sixteen months earlier, the ninth item in a packed programme that also took in foreign policy, defence and the economy.

Why does this matter? Because it tells us three things:

First, that Kennedy and his advisors were smart enough to recognise when they were on to a winner.

Second, that the best way to establish an idea you’ve recognised as a winner is to keep talking about it.

And, third, that big ideas are all about meaning: people won’t remember the specific words you used, but they will remember how those words made them feel.

This is because your brain finds it a lot easier to remember things when they prompt an emotional response. A strong feeling of excitement, or pleasure, or humour, or sadness, releases dopamine into your brain – and this acts like a kind of mental post-it note, making it easy for your sub-conscious to access that memory.

What Kennedy did was to outline a bold, exciting, uplifting adventure – you can bet there was dopamine exploding in brains all over the country.

Millions of people heard Kennedy’s speech. Very few of them would have been able to remember a single one of the 2,207 words that went into it. They didn’t need to – they only needed to remember the gist.

When Kennedy later visited NASA’s Houston base to check on progress, he met a janitor who, replying to a question about what he did, said ‘Mr President, I’m helping to put a man on the moon’. That’s engagement.

Even tax-payers loved it – and he was telling them he was going to be spending a lot more of their money.

Would the audience have been so excited if Kennedy had said ‘our mission is to make NASA the pre-eminent global leader in aeronautical technology’? Or would they have preferred lower taxes?

Engaging people with your business is all about emotion and belief. If you get it right, it makes it easy for you to attract and motivate people who believe in what you believe in.

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what’s this blog about?

Internal communication has come a long way in the last ten years (mostly because companies have figured out that customer experience is now far more important to their long-term success than advertising). But there’s still plenty of room for improvement. That’s what this blog is about – calling out the problems and sharing ideas about how to solve them…